Hacker News Reader

Comment by Scoundreller | Hacker News Reader

More of a federal Medicare problem because the government runs an insurance plan that fails to throw its heft around and negotiate beyond “you can’t charge us more than other insurers”.

Gets very opaque fast.

Edit: lots of (I assume) correct points below about hospital/procedure charges, but it’s only in 2026 that Medicare will start negotiating drug prices, and just for 10 medications in the first year:

> For the first time, Medicare will be able to negotiate prices directly with drug companies, ensuring lower prices on some of the costliest prescription drugs

https://www.hhs.gov/about/news/2023/03/15/hhs-releases-initi...

View on HN

> More of a federal Medicare problem because the government runs an insurance plan that fails to throw its heft around and negotiate beyond “you can’t charge us more than other insurers”.

You've got it backwards. Medicare does negotiate, in some cases reimbursing less than COGS. Hospitals and providers make up for it by charging private insurers more (that's why private insurance contracts always state that they reimburse X% of the Medicare Allowable Rate, where X > 100).

Looks like it’s only starting for drugs in 2026. But until now, they paid whatever list price the manufacturers dreamed up:

> For the first time in history, Medicare will have the ability to negotiate lower prescription drug prices because of the Inflation Reduction Act

https://www.hhs.gov/about/news/2023/03/15/hhs-releases-initi...

> Looks like it’s only starting for drugs in 2026. But until now, they paid whatever list price the manufacturers dreamed up:

We're not talking about prescription drugs - the entire thread so far has been about inpatient and outpatient care.

Medicare does not negotiate prices for prescription drugs at the moment, but that's because pharmaceutical coverage for Medicare is provided by private insurers, and those private insurers are responsible for negotiating the rates.

10 drugs out of probably tens of thousands.

There are Reference Based Pricing plans available in the commercial medical insurance world now.

So yes you can "pay what medicare pays" be prepared to have some pissed off doctors and balance billing.

> There are Reference Based Pricing plans available in the commercial medical insurance world now.

> So yes you can "pay what medicare pays" be prepared to have some pissed off doctors and balance billing.

You're not wrong but your description is conflating two different things.

What you're describing - "pay what Medicare pays" is more or less how private insurance typically works for in-network providers. The provider gets paid X% of the Medicare Allowable Rate (where X > 100), and that comes either from the patient or the insurer (depending on any applicable deductible, copay, OOP max, etc.)

Reference-based pricing applies that to all providers, including out-of-network providers. However, except for care received in the emergency room, the provider is allowed to bill the patient for the difference between what the insurer allows and what the provider charges. Some plans will actually allow in-network providers to bill patients for the balance. In that case, everyone wins except the patient: the insurer/employer has a fixed cap on their costs per service, and the hospital/provider doesn't have to settle for a lower rate.

>>"Reference-based pricing applies that to all providers, including out-of-network providers."

RBP is a multiple of standard Medicare rates, say 140%, often is substantially less than a negotiated rate from a Carrier, hence balance billing and not so happy provider. Basically a take it or leave it option for the provider, many of which simply take it and move on. Not claiming right or wrong, just stating facts.

RBP uses the Medicare "network".

> RBP is a multiple of standard Medicare rates, say 140%, often is substantially less than a negotiated rate from a Carrier, hence balance billing and not so happy provider.

Negotiated rates are also themselves set as multiples of the Medicare Allowable Rate. Both are set as multiples of Medicare rates; that's not something unique to reference-based pricing.

>>Negotiated rates are also themselves set as multiples of the Medicare Allowable Rate.

Care to provide proof of that statement?

"...instead of negotiating prices with providers."

From the American Hospital Association:

https://www.aha.org/fact-sheets/2021-06-08-fact-sheet-refere...

Reply on news.ycombinator.com